Ch25 Keynesian Perspective

*Ch25 Keynesian Perspective*

*Multiple Choice Questions*

*1.* Consumption, investment, government spending, exports, and imports are:

A. all complementary elements of a market-orientated economy.
B. some of the opposing elements found in a market-orientated economy.
C. all components of aggregate demand.
D. some of the building blocks of Keynesian analysis.

Answer: C Reference:

Explanation:

Type: Multiple Choice Category: Remember

*2.* If markets throughout the global economy all have flexible and continually adjusting prices, then:

A. all market-oriented economies will implement coordinated wage reductions.
B. each economy will always head for its natural rate of unemployment.
C. each economy must shift in aggregate demand and create additional employment.
D. all changes in prices and wages will create additional employment.

Answer: B Reference:

Explanation:

Type: Multiple Choice Category: Analyze

*3.* Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a ______________________ for minimizing their effects.

A. pricing strategy
B. macro-economic model
C. set of menu costs
D. policy prescription

Answer: D Reference:

Explanation:

Type: Multiple Choice Category: Remember

*4.* Aggregate demand is more likely to _________________ than aggregate supply in the short run.

A. shift substantially
B. remain unchanged
C. decrease substantially
D. increase slightly

Answer: A Reference:

Explanation:

Type: Multiple Choice Category: Remember

*5.* The equilibrium quantity of labor and the equilibrium wage level decrease when:

A. labor supply shifts to the right, if wages are flexible.
B. labor demand shifts to the right, if wages are flexible.
C. labor demand shifts to the left, if wages are flexible.
D. labor supply shifts to the left, if wages are flexible.

Answer: C Reference:

Explanation:

Type: Multiple Choice Category: Analyze

*6.* The equilibrium quantity of labor and the equilibrium wage increase when:

A. labor supply shifts to the right, if wages are flexible.
B. labor demand shifts to the right, if wages are flexible.
C. labor demand shifts to the left, if wages are flexible.
D. labor supply shifts to the left, if wages are flexible.

Answer: B Reference:

Explanation:

Type: Multiple Choice Category: Analyze

*7.* The equilibrium quantity of labor increases and the equilibrium wage decreases when:

A. labor demand shifts to the left, if wages are flexible.
B. labor supply shifts to the left, if wages are flexible.
C. labor demand shifts to the right, if wages are flexible.
D. labor supply shifts to the right, if wages are flexible,

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